In this project, we will test the effects of housing price risk on housing choice and wealth accumulation. Our model predicts that people who live in areas or countries with higher housing price risk should own their first home at a younger age, should live in larger homes, should have less steep housing consumption profiles, and should hold less equity in risky assets such as stocks. We will extend this model to incorporate two additional types of important risks individuals face-- income risk, which is concentrated in the younger phases of the life cycle;and health risk, which is more relevant at older ages. We will also extend our model into the older stages of the life cycle, so that we can examine both theoretically and empirically whether people are willing to downsize to fund their retirement consumption and how this decision is affected by volatile house prices. Finally, we will extend our work to four additional countries--Spain, Italy, Germany, and Canada--that vary considerably in patterns of home ownership and in housing price risk. We will continue to investigate the impact of capital gains in stocks and housing on consumption and savings. Using data from the US and UK, we will be particularly concerned with whether these 'wealth effects'on consumption and savings varied across different types of assets and the extent to which these estimated effects can explain the long-term swing in household savings rates.